Money Transfer (isolated with clipping path)
Four men allegedly stole more than $473,000 from member accounts at North Carolina’s largest credit union.
In an August indictment, federal prosecutors stated the perpetrators exploited a software security vulnerability to steal the funds at the $56.2 billion SECU. However, the Raleigh-based credit union said the accused men took advantage of an operational issue that enabled them to steal funds from April to September 2022.
“SECU would like to clarify that this [alleged fraud] did not result from a security vulnerability as was reported, but an operational process that has since been updated,” an SECU spokesperson said Monday.
Federal prosecutors had no further comment when reached by CU Times for clarification.
Calvin Steward, Quavedrian Gibson, Keyondre Purvis and Michael Ryner have been charged with multiple felony counts of bank fraud and conspiracy to commit bank fraud.
According to prosecutors, for a limited period every night, usually around 2 a.m., SECU’s computer systems entered a reconciliation period, during which all daily member activity — deposits and withdrawals, whether in person, via ATMs or CashApp — was processed. During this downtime, the systems could not determine actual account balances and temporarily assumed a balance equal to the total volume of daily transactions.
For example, if a member’s account showed a $1,000 check deposit and a $500 cash withdrawal, SECU credited the account as having at least $1,500 during that day's reconciliation. This meant up to $1,500 could be withdrawn from that account during the reconciliation period regardless of the actual balance, according to the indictment.
The accused men allegedly took advantage of this window by repeatedly depositing and withdrawing funds from various accounts to inflate the assumed balances. This enabled them to withdraw large sums in excess of actual account balances.
Court documents showed at least 11 SECU members' accounts were affected.
Prosecutors said the accused men solicited their friends, family-members, acquaintances and SECU members to maximize the fraudulent scheme.
Sometimes, the SECU members engaged in some of the sham transactions on their own or together with the alleged perpetrators. In other instances, SECU members allowed the accused men to access their accounts without any further direct participation in the scheme.
The accused men allegedly promised participants a portion of the stolen funds in exchange for access to their accounts. Federal prosecutors have not estimated how many members were complicit in the scheme.
“SECU takes all instances of fraud very seriously and is committed to protecting our members’ assets and privacy,” the SECU spokesperson said.
“As with this case in 2022, when instances of fraud are identified, we work closely with law enforcement to help ensure that justice will be served.”
Stewart and Purvis appeared in federal court last week in Raleigh but they did not enter pleas. An arrest warrant for Gibson has been issued.
Court filings for Ryner were not available.
Read More: Grand Jury Indictment Allegations
Peter Strozniak can be reached at pstrozniak@cutimes.com.
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